Wednesday, September 30, 2009

Short Term Bearish Case Still Intact, But Wobbling; September 30, 2009

Today was the last day of the 3rd quarter and many fund managers were jossling around their portfolios to have a good look for their quarterly statements. As a result, the market sold off sharply early in the morning but then rallied into positive territory only to sell off again and rally again. This has made the short term EWP count messy. Also, the Dow made a new low (see prior post below) from last week while no other major index did, creating a bullish non-confirmation. On top of this, the market has been able to alleviate some of its extreme bullish measures while only falling slightly from its highs last week. We've seen this before. Indicators reach extremes, the market falls slightly then moves sideways, alleviates the bullish extremes, then rally to new highs. So it appears that this is what may be occuring right now as well.

However, there is plenty of evidence to suggest "The Top" is in right now as well, and the only bullish elements to this market right now are the fact that we had a wild and crazy day on the last day of the quarter. So this may all be resolved in a few days as trading gets back to normal. Also, at major market tops, there tends to be wild up and down swings in the market as the exhausted bulls desperately try to fight off the bears who eventually win.

So let's give the market some time to work out this unclear structure it's laid before us. Hopefully within a few days I'll have a better idea of what's transpiring.

I remain aggressively short term bearish as long as the S&P cash remaains beneath 1078.


Michael Eckert,aka-Columbia1 said...

Nice blog, Hope you dont mind me adding it to my favorite blogs :)

Michael Eckert,aka-Columbia1 said...

Michael K. said...

S&P 500 went under 1041!!! Now its getting real exciting.

Todd S said...

Yes, Michael, it is. The decline is looking strong and healthy for what should be expected this part in the wave count.

I'm looking for key levels that will signal a confirmation of wave 3 being underway.